Company Overview
La-Z-Boy Incorporated manufactures, markets, imports, exports, distributes, and retails upholstery furniture products across the United States, Canada, and international markets, operating primarily through its Wholesale and Retail segments. The company operates within the Consumer Cyclical sector and specifically within the Furnishings, Fixtures & Appliances industry, positioning it as a provider of durable home furnishings subject to economic cycles. With a market capitalization of $1.32B and an annual revenue of $2.13B, the entity demonstrates a significant operational footprint supported by a workforce of 10,600 employees. These valuation and revenue figures indicate that La-Z-Boy maintains a substantial presence in the global furniture market, though its market cap relative to revenue suggests a valuation that may reflect current earnings pressures or sector-specific headwinds rather than pure revenue scale. The scale of operations, evidenced by the number of employees and the breadth of international distribution, underscores the company's established infrastructure required to manage a complex supply chain for upholstered goods.
Financial Health
The company reported a revenue of $2.13B and an EBITDA of $186.86M over the trailing twelve months, while generating a net income of $83.64M. The substantial gap between the $186.86M in EBITDA and the $83.64M in net income reveals a significant cost structure impact from interest expenses, taxes, and potentially non-operating items that reduce bottom-line profitability relative to operating cash generation. Despite the EBITDA figure, the free cash flow stands at $194.68M, which indicates strong financial flexibility and the ability to fund operations, service debt, or return capital to shareholders without relying solely on external financing. The company's gross margin is 43.6%, indicating strong pricing power or high efficiency in production before overhead costs are considered. Operating margins sit at 5.4%, while profit margins are 3.9%, suggesting that significant operational expenses and tax burdens compress the final profit relative to total sales. In terms of liquidity and leverage, the company holds $308.90M in cash against $568.47M in debt, resulting in a debt-to-equity ratio of 53.88, which characterizes a moderately leveraged balance sheet where debt levels are nearly double the equity base. The current ratio is 1.66, indicating that the company possesses sufficient current assets to cover its short-term liabilities with a comfortable margin of safety. Return on Equity is 8.1% and Return on Assets is 4.3%, metrics that reveal management's effectiveness in generating returns relative to the capital invested and the total asset base, respectively, with the disparity highlighting the leverage impact on equity returns.
Valuation Assessment
The trailing twelve-month P/E ratio is 15.97, while the forward P/E is projected at 10.73. The notable difference between these two multiples implies that the market expects earnings to increase significantly in the future, as the forward multiple is substantially lower than the trailing one, suggesting a compression in valuation if current expectations are met. The price-to-book ratio stands at 1.25, indicating that the market values the company at a slight premium of 25% over its tangible book value, reflecting intangible assets or brand equity that are not fully captured on the balance sheet. Alternative valuation metrics such as the price-to-sales ratio of 0.62 and the EV/EBITDA of 8.45 suggest that the stock is priced at less than one dollar of revenue and offers a relatively low multiple of earnings before interest, taxes, depreciation, and amortization compared to historical averages for the sector. The 52-week high is $44.49 and the 52-week low is $29.03, meaning the current trading price sits within this range, though the specific current price is not listed in the provided facts, only the bounds of recent volatility. The beta value is 1.28, which means the stock is expected to be 28% more volatile than the broader market, suggesting higher sensitivity to market movements and economic downturns typical of consumer discretionary stocks.
Growth & Income
Revenue growth for the year-over-year period is 3.8%, whereas earnings growth is -23.5%. The fact that earnings are shrinking at a much faster rate than revenue indicates that the company is facing severe margin compression or one-time charges that are disproportionately affecting profitability compared to top-line expansion. For this dividend-paying entity, the dividend yield is 3.0% with a payout ratio of 45.1%, a metric that suggests the payout is currently sustainable as it is paid from less than half of the net income generated. However, the negative earnings growth rate combined with a positive payout ratio presents a risk, as the company must eventually increase earnings to maintain the absolute dollar amount of dividends paid to shareholders. The overall growth and income profile presents a dichotomy of modest top-line expansion supported by a robust free cash flow position, contrasted sharply by declining earnings and a high level of beta-driven price volatility relative to the broader market.